Which of the Following Represents the Impact of a Taxable

question 93

Multiple Choice

Which of the following represents the impact of a taxable cash sale of $400 on the accounting equation if the sales tax rate is 5%?

• A) An increase to cash for $420, an increase to sales tax expense for $20, and an increase to sales revenue for $400.
• B) An increase to cash for $400, an increase to sales tax payable for $20, and an increase to sales revenue for $380.
• C) An increase to cash for $420, an increase to sales tax payable for $20, and an increase to sales revenue for $400.
• D) None of these answer choices is correct.

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